NAV Update, Dividend and Placing

Released 07:00 26-Apr-2019

RNS Number : 1682X

Gresham House Energy Storage Fund

26 April 2019

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO US PERSONS OR INTO THE UNITED STATES, AUSTRALIA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR THEIR RESPECTIVE TERRITORIES OR POSSESSIONS, OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, ANY OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR, ANY SHARES IN THE COMPANY OR SECURITIES IN ANY OTHER ENTITY, IN ANY JURISDICTION, INCLUDING THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR THEIR RESPECTIVE TERRITORIES OR POSSESSIONS, NOR SHALL IT, OR ANY PART OF IT, OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION TO PURCHASE OR SUBSCRIBE FOR ORDINARY SHARES IN THE COMPANY WHATSOEVER, IN ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A RECOMMENDATION REGARDING ANY SECURITIES. ANY INVESTMENT DECISION MUST BE MADE EXCLUSIVELY ON THE BASIS OF THE PROSPECTUS PUBLISHED BY THE COMPANY ON 17 OCTOBER 2018 (THE "PROSPECTUS") AND THE SUPPLEMENTARY PROSPECTUS PUBLISHED BY THE COMPANY ON 6 NOVEMBER 2018 (THE "SUPPLEMENTARY PROSPECTUS") AND ANY FURTHER SUPPLEMENTARY PROSPECTUS(ES) IN CONNECTION, INTER ALIA, WITH THE COMPANY'S PLACING PROGRAMME. A COPY OF THESE DOCUMENTS CAN BE FOUND ON THE COMPANY'S WEBSITE AT NEWENERGY.GRESHAMHOUSE.COM/ESFPLC/ AND IS ALSO AVAILABLE ON THE NATIONAL STORAGE MECHANISM AT WWW.MORNINGSTAR.CO.UK/UK/NSM .

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

26 April 2019

GRESHAM HOUSE ENERGY STORAGE FUND PLC

("GHES" or the "Company")

NAV and operational update, declaration of dividend and placing to fund acquisition pipeline

Highlights

· NAV as at 31 March 2019 of £99.95 million, with NAV per Ordinary Share of 99.95 pence

· Dividend of 1.4 pence per Ordinary Share announced for the period from inception to 31 March 2019

· Current portfolio comprises five fully operational energy storage systems with a total capacity of 70MW

· The Company benefits from an exclusive pipeline comprising five additional projects with a total capacity of 182MW

· From this pipeline the Company will

o acquire its first 5MW project since the IPO in the coming weeks; and

o deploy remaining IPO proceeds by end of the year into a 50MW project

· Placing of up to 75 million new ordinary shares of 1 pence each in the capital of the Company ("Placing Shares") at an issue price of 101 pence per Placing Share to be used for further pipeline acquisitions

Net Asset Value

GHES, the specialist investment company that invests in energy storage systems in Great Britain, announces that its Net Asset Value as at 31 March 2019 amounted to £99.95 million or 99.95 pence per Ordinary Share.

The Net Asset Value comprised investments in ESS Projects valued at approximately £60.89m (gross of undistributed cash at the project level) and cash and net current assets held on the balance sheet of approximately £39.06m.

Dividend

The Company is pleased to announce an interim dividend of 1.4p per Ordinary Share for the period from inception to 31 March 2019. The dividend will be paid on 7 June 2019 to Shareholders on the register as at the close of business on 17 May 2019. The ex-dividend date is 16 May 2019.

The Company reaffirms its target to pay dividends totalling 4.5 pence per Ordinary Share in respect of the financial period to 31 December 2019.This is a target only and is based on current market conditions as at the date of this announcement and is not a profit forecast. There can be no assurance that this target will be met or that the Company will make any distributions at all. This target should not be taken as an indication of the Company's expected or actual current or future results. The Company's actual return will depend upon a number of factors, including but not limited to the Company's net assets, income and the Company's ongoing charges figure. Potential investors should decide for themselves whether or not the return is reasonable and achievable in deciding whether to invest in the Company. See further under the section headed ''Risk Factors" in the Prospectus.

In connection with the dividend payment and as required by the Companies Act, the Company will shortly file initial accounts for the period from inception to 28 February 2019 at Companies House. The accounts once filed, will be available online at newenergy.greshamhouse.com/esfplc/.

Operational update

On 17 October 2018, the Company published the Prospectus (as supplemented by the Supplementary Prospectus) in connection with its initial public offering and a Placing Programme for up to 200 million Ordinary Shares less the number of Ordinary Shares issued on its initial public offering and 100 million Ordinary Shares were subsequently admitted to trading on the Specialist Fund Segment on 13 November 2018.

The £100 million gross proceeds raised in November 2018 (the "initial gross proceeds") were deployed, in part and after costs, to acquire the Seed Portfolio of five fully operational ESS Projects with a total capacity of 70MW for approximately £57 million. In addition, the Company expects to deploy further capital into a capacity extension at one of the existing projects and battery upgrades at several of the existing projects, activities that were planned prior to acquisition.

The Company's next pipeline project, in Wolverhampton, is now operational and the Company will acquire it once the provisional acceptance certificate ("PAC") has been issued. Construction will shortly commence on a 50MW project, which the Company has exclusivity to purchase, following the PAC being issued.

Accordingly, it is expected that the initial gross proceeds will be fully deployed by the end of the year. The Manager is also working with lenders to put in place a borrowing facility for the Company to finance future acquisitions.

The current portfolio generates revenues primarily from Firm Frequency Response contracts with the National Grid. The Company is pleased to report that the whole portfolio was successfully exporting electricity during each of the three half-hour winter peaks, known as Triads, for which the remuneration is particularly enhanced. During 2019, operations will increasingly target the asset optimisation (trading) strategy as it becomes more profitable.

The Board and the Manager are satisfied with the technical performance of the assets since IPO and the Manager continues to improve operations and seek additional net income from the projects.

The Capacity Market ("CM") scheme remains subject to a "standstill" order due to the ECJ ruling last November. The Manager believes the CM scheme is likely to be reinstated or replaced with a similar mechanism. However, if it is not, the result may be more volatile intraday electricity prices, increasing the opportunity for ESS projects to generate revenues under the asset optimisation model. This may offset any loss of income associated from the withdrawal of the CM mechanism.

The Board and the Manager believe that Great Britain will experience an increasing need for energy storage systems as the proportion of total electricity supply from renewable sources grows. The UK's exposure to renewable energy generation continues to increase despite the removal of subsidies to onshore wind and solar. Development of offshore wind in particular is likely to take renewable generation to over 50 per cent. within two years, according to government forecasts, generating an even more volatile supply of electricity and power prices which underpins the opportunity for ESS.

Research from Pöyry and Imperial College London dated May 2017 indicated total UK storage capacity rising from approximately 2.9GW in 2020 to 20.3GW in 2030 in the central case, with a high case seeing as much as 35GW of storage capacity by 2030. Bloomberg has identified a total of just 694MW commissioned as at 31 March 2019.

The Board and Manager believe that the Company is well-positioned to contribute to this growth by continuing to acquire newly developed operational assets.

Placing

Today the Board announces a proposed non pre-emptive placing of up to 75 million Placing Shares under the Placing Programme to institutional investors (the "Placing"), at a price of 101 pence per Placing Share (the "Placing Price"). The Placing Shares will not rank for the dividend of 1.4 pence per Ordinary Share declared by the Company today, but will otherwise rank pari passu with the Company's existing Ordinary Shares in issue.

The Placing Price represents a discount of approximately 2.5 per cent. to the closing middle market price of 105 pence per Ordinary Share at the close of business on 24 April 2019 when adjusted for the dividend declared today.

The Placing is being launched immediately following this announcement and will close at 3:00 p.m. in London on 24 May 2019. Cantor Fitzgerald Europe ("Cantor Fitzgerald") is acting as sole bookrunner in connection with the Placing.

The Placing will allow the Company to commit to acquire further ESS Projects, including some or all of the Exclusivity Portfolio described in the Prospectus, once the appropriate development milestones have been reached. It is expected that the net proceeds of the Placing will be fully deployed by the end of the first quarter of 2020.

Expected timetable

Placing opens

26 April 2019

Latest time and date for receipt of Placing commitments

3:00 p.m. GMT on 24 May 2019

Announcement of the results of the Placing

24 May 2019

Admission of the Placing Shares to the Specialist Fund Segment and dealings commence

As soon as practicable after 8.00 a.m. in London on 29 May 2019

Crediting of CREST stock accounts in respect of the Placing Shares

29 May 2019

The Company, in consultation with Cantor Fitzgerald, reserves the right to close the Placing early. In such event, the Company will notify the market by the publication of a notice through a Regulatory Information Service.

Details of the Placing

The Placing is conditional inter alia, on the Placing Shares being admitted to trading on the Specialist Fund Segment of the main market of the London Stock Exchange plc ("Admission").

The Placing is subject to the terms and conditions set out in the Prospectus.

Cantor Fitzgerald will today commence a bookbuild process in respect of the Placing at the Placing Price. The Placing will be non pre-emptive pursuant to the terms set out in the Prospectus and the book will open with immediate effect following this announcement and is expected to close no later than 3:00 p.m.in London on 24 May 2019 but may be closed earlier or later at the discretion of the Company, in consultation with Cantor Fitzgerald.

Details of the number of Placing Shares to be issued pursuant to the Placing will be determined by the Company (following consultation with Cantor Fitzgerald) and will be announced as soon as practicable after the close of the Placing. The Company reserves the right (following consultation with Cantor Fitzgerald) to increase the number of Placing Shares to be issued, subject to a maximum of 100 million Placing Shares. In the event of oversubscription of Placing Shares, applications may be scaled back at Cantor Fitzgerald's discretion, in consultation with the Company. The Placing Shares will be allocated at the discretion of Cantor Fitzgerald in consultation with the Company.

Application will be made for Admission of the Placing Shares. Subject to Admission becoming effective, it is expected that settlement of subscriptions by placees in respect of the Placing Shares and trading in the Placing Shares will commence at 8.00 a.m. in London on 29 May 2019, or such other time and/or date as may be announced by the Company after the close of the Placing.

By choosing to participate in the Placing and by making a legally binding commitment to acquire Placing Shares, investors will be deemed to have read and understood each of this announcement, the Prospectus and the Supplementary Prospectus in its entirety and to be making such offer on the terms and subject to the conditions contained in the Prospectus, and to be providing the representations, warranties and acknowledgements contained in the Prospectus.

Investors' attention is drawn to the detailed terms and conditions of the Placing Programme set out in the Prospectus, in particular, as set out in Part 15 therein.

Terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the Prospectus which can be found on the Company's website at newenergy.greshamhouse.com/esfplc/.

Gresham House Energy Storage Fund PLC owns a portfolio of five utility-scale operational energy storage systems (known as ESS) located in Great Britain. The portfolio has a total capacity of 70MW. The Company is managed by Gresham House Asset Management Limited under the leadership of Ben Guest. The Company was admitted to trading on the London Stock Exchange (Specialist Fund Segment) on 13 November 2018 having raised £100 million of gross proceeds from investors.

The Gresham House New Energy team has a proven track record in developing and operating energy storage and other renewable assets sector having developed 70MW of Energy Storage Systems and approximately 290MW of predominantly ground-mounted solar projects.

DISCLAIMERS

This announcement has been prepared for information purposes only. This announcement is not an offer to sell or a solicitation of any offer to buy the Shares in the Company in the United States, Australia, Canada, the Republic of South Africa, the Republic of Ireland or Japan, or any of their respective territories or possessions, or in any other jurisdiction where such offer or sale would be unlawful. No action has been taken by the Company or Cantor Fitzgerald that would permit an offering of any Shares or possession or distribution of this announcement or any other offering or publicity material relating to such Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and Cantor Fitzgerald to inform themselves about, and to observe, such restrictions.

This communication is not for publication or distribution, directly or indirectly, in or into the United States of America. This communication is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold, resold, transferred or delivered directly or indirectly in the United States, or to, or for the account or benefit of, U.S. Persons, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

The Company has not been and will not be registered under the US Investment Company Act of 1940 (the "Investment Company Act") and, as such, holders of the Shares will not be entitled to the benefits of the Investment Company Act. No offer, sale, resale, pledge, delivery, distribution or transfer of the Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act.

This communication is only addressed to, and directed at, persons in member states of the European Economic Area (other than the United Kingdom) who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors"). For the purposes of this provision, the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each member state of the European Economic Area which has implemented the Prospectus Directive. In addition, in the United Kingdom, this communication is being distributed only to, and is directed only at, Qualified Investors: (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) who are high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order, and (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). Any investment or investment activity to which this communication relates is available only to and will only be engaged in with such persons. This communication must not be acted on or relied on in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors.

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the Company. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.

This announcement may not be used in making any investment decision. This announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this announcement or its completeness.

The information and opinions contained in this announcement are provided as at the date of the announcement and are subject to change without notice and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, the Manager, Cantor Fitzgerald or any of their affiliates or by any of their respective officers, employees or agents to update or revise publicly any of the statements contained herein. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this announcement or on its completeness, accuracy or fairness. The document has not been approved by any competent regulatory or supervisory authority.

The Company has a limited trading history. Potential investors should be aware that any investment in Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. Any data on past performance contained herein is no indication as to future performance and there can be no assurance that any targeted or projected returns will be achieved or that the Company will be able to implement its investment strategy or achieve its investment objectives. The returns set out the Prospectus are targets only. There is no guarantee that any returns set out in the Prospectus can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the returns set out in the Prospectus. Risks that the Company is subject to include reliance on third party providers to carry on its business and there being an adverse change in laws or regulations which affect the Company or its portfolio. In addition, if the growth in renewable energy does not continue as expected this may have an adverse impact on the Company's performance. When certain contracts with National Grid Electricity Transmission PLC expire the Company may not be able to obtain contracts on the same terms or at all which may harm the performance of the Company. The introduction of leverage by the Company may increase the volatility of returns and providers of leverage would rank ahead of investors. A full explanation of risks is in the Prospectus. Potential investors should therefore read the section of the Prospectus entitled ''Risk Factors'' when considering an investment in the Company.

The information in this announcement may include forward-looking statements, which are based on the current expectations, intentions and projections about future events and trends or other matters that are not historical facts and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereof) or other variations thereof or comparable terminology. These forward-looking statements, as well as those included in any related materials, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions about the Company and other factors, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur and actual results may differ materially from those expressed or implied by such forward looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.

Each of the Company, the Manager, Cantor Fitzgerald and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this announcement and any errors therein or omissions therefrom.

No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this announcement. The information contained in this announcement will not be updated.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Shares or passed upon or endorsed the merits of the offering of Shares or the adequacy or accuracy of this announcement.

Prospective investors should take note that the Shares may not be acquired by: (i) investors using assets of: (A) an "employee benefit plan" as defined in Section 3(3) of US Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the US Internal Revenue Code of 1986, as amended (the "US Tax Code"), including an individual retirement account or other arrangement that is subject to Section 4975 of the US Tax Code; or (C) an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the US Tax Code; or (ii) a governmental, church, non-US or other employee benefit plan that is subject to any federal, state, local or non-US law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the US Tax Code.

Cantor Fitzgerald is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Cantor Fitzgerald is acting for the Company and no one else in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cantor Fitzgerald or for affording advice in relation to any transaction or arrangement referred to in this announcement. This announcement does not constitute any form of financial opinion or recommendation on the part of Cantor Fitzgerald or any of its affiliates and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.

In accordance with the Packaged Retail and Insurance-based Investment Products Regulation (EU) No 1286/2014, the Key Information Document relating to the Company is available to investors at http://newenergy.greshamhouse.com/esfplc/.

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